Vivek Arya : Thank you.
Operator: Our next question is going to come from Ambrish Srivastava with BMO Capital Markets. Your line is open.
Ambrish Srivastava : Hi. Thank you very much. I wanted to ask about automotive and industrial. Industrial has weakened for some of the competitors for quite a few quarters, and auto’s continues to be strong, you know more or less, although the growth rate seems to be descending. What’s your take on having these for several cycles? We just started here and lead times on our contracting. So how many quarters do you think the weakness in auto, and to that matter industry for your business we should expect loss?
Ganesh Moorthy: You know, it’s very difficult for me to answer that question. There is that question of, which part of this is just inventory digestion that’s taking place. And how much of it is consumption changes and how consumptions changes might change? So just using China as the example, China consumption was weak or weaker than anyone expected in the June quarter. Now, how does it come back in the September or December quarters is anybody’s guess and where it’s at. So I don’t have a clear view of how long does automotive or industrial stay weak. We’ve gone through many cycles. They don’t last forever obviously, and there are some typical cycles you can look back on and see how they perform.
Ambrish Srivastava : Well, it’s true. I just had a quick follow-up, Ganesh. I’m struggling with the R part of the NCNRs. What’s the learning here? Has it allowed you to reduce the volatility that usually used to occur when we were going into a downturn, because you keep rescheduling these. I shouldn’t say keep. A couple of quarters you rescheduled these, and you expect another reschedule next quarter. What’s the right way investors should think about this? Because we’ve seen NCNRs by many companies improve, and so I don’t know what’s the learning from this.
A – Ganesh Moorthy: Well, the purpose of the NCNR was to get a mutual commitment of investment we were going to make and benefit a customer was going to get. It’s based on a set of assumptions about where business is going to go, and I think as lead times go farther and farther out, everybody’s visibility gets to be less clear. And the vast majority of the customers who were part of the NCNR programs have been extremely happy with what they were able to get in an extremely different environment in 2021 and 2022. You know, no program is perfect. I believe that our programs have had substantially more benefit than issues with them. We are at a point of the cycle where the demand curve has changed, and as that demand curve changes, we have to adjust.
And by the way, the same demand curve will change again as we go into 2024. So I think we have to look beyond the short-term view of where this all ends up and look at how do these programs provide mutual benefit in the medium to long term.
Ambrish Srivastava : Makes sense. Thank you.
A – Ganesh Moorthy: You’re welcome.
Operator: [Operator Instructions] Our next question is going to come from Joe Moore with Morgan Stanley, your line is open.
Joe Moore : Great. Thank you, guys. I guess you’re describing an environment in which you’re seeing weakness in multiple regions, weakness in multiple end markets, and you’re characterizing that as kind of early signs of that, and yet you’re only guiding down 1% quarter-on-quarter. So I guess its like, do you have a level of demand that’s lower than this? I mean, you have a lot of backlog right now. What happens as that backlog runs out. Can you just give us a sense for what type of drawdown we might be looking at over the course of the next few quarters? Just anything qualitative you can help, so that would be great.
A – Ganesh Moorthy: We’re calling it as we see it. We’ve given you a guidance for September quarter that brackets between plus one and minus three, and that reflects what we see today in our backlog and what we see in the tone of the business. We’re giving you a sense that the December quarter is going to be seasonally weaker than normal. And again, it has a number of puts and takes that could go into it. I don’t know what more I can say, Joe. It’s the best that we’re able to peer into the future and provide some insight as to where we think business is going.
Joe Moore : I can appreciate that. Thank you. And then, in terms of the 40% operating margin, can you give us a sense for what the parameters are of that? Like how much – you know, is that kind of a normal revenue weakness that you might have seen two or three years ago? Could you still do a north of 40% if it’s worse than that? Can you just give us a sense for your confidence in the durability of that number?
